Polynesian Ltd v Samoa Observer Company Ltd [1999] WSSC 35 (30 July 1999)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA

BETWEEN:

POLYNESIAN LIMITED,
trading as Polynesian Airlines,
a duly incorporated company having its registered office at Beach Road, Apia.
PLAINTIFF

AND:

SAMOA OBSERVER COMPANY LIMITED,
a duly incorporated company having its registered office at Vaitele.
FIRST DEFENDANT

AND:

AUMUAGAOLO ROPETI ALE,
of Toamua, Editor.
SECOND DEFENDANT

AND:

SAVEA SANO MALIFA
of Vaitele, Publisher.
THIRD DEFENDANT

Counsel: Katalaina Sapolu for the Plaintiff
Patrick Fepuleai & Harry Schuster for the Defendants

Hearing Date: 19 February 1999
Date of Decision: 30 July 1999

REASONS FOR DECISION AS TO COSTS OF JUSTICE WILSON

The question for my decision is whether I should order the unsuccessful defendants to pay to the successful plaintiff costs upon an indemnity basis or upon the basis of the ordinary rule in favour of party and party costs.

It is well-established in Samoa that this Court is not bound by the scale costs under the Supreme Court (Fees and Costs) Rules 1971 (see Rule 5 thereof and Tomau Eti Alesana v Samoa Observer Company Limited and Savea Sano Malifa - the unreported decision of Bisson J in No.42/97 dated 16 September 1998).

It has been held that it is open to the Court, in exercising its discretion to award more than scale costs, to award indemnity costs or, at least, 'the costs reasonably and properly incurred by the successful party' (see Tomau's case supra at p.2-3, applying Morton v Douglas Homes Ltd. (No.2) (1984) 2 NZLR 620 at p.625).

The principles which govern the discretion of courts to depart from ordering costs on a party and party basis and ordering costs on an indemnity basis are now well-established.

In New Zealand in Kuwait Asia Bank EC v National Mutual Life Nominees Ltd (1989-91) 3 PRNZ 571 (referred to in Tomau's case supra at p.3) Cooke P (as he then was) said (at p.574):

"If a party has acted unreasonably - for instance by pursuing a wholly unmeritorious and hopeless claim or defence - a more liberal award may be made in the discretion of the Judge, but there is no invariable practice".

(The emphasis is mine.)

In Australia in Fountain Selected Meat (Sales) Pty Ltd. v International Produce Merchants (1988) 81 ALR 387 Woodward J said (at p 401):

"I believe that it is appropriate to consider awarding 'solicitor and client' or 'indemnity' costs whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law".

(The emphasis is mine.)

A later and more persuasive authority than the decision in the Fountain Selected Meat case supra is Re Wilcox; Ex parte Venture Industries Pty Ltd. and Others (1996) ] 41 ALR 727. In that case Black CJ said (at p.728):

"The circumstances under which indemnity costs will be ordered have been discussed in many cases in this court and it is well established that the starting point for any consideration of an application for indemnity costs is that in the ordinary case costs will follow the event and the court will order the unsuccessful party to pay the costs of the successful party, on a party and party basis, a basis which will fall short of complete indemnity. Nevertheless the court has an absolute and unfettered jurisdiction in awarding costs, although that discretion must be exercised judicially. So, indemnity costs may properly be awarded where there is some special or unusual feature in the case justifying the court exercising its discretion in that way: see John S Hayes & Associates Pty Ltd. v Kimberly-Clark Australia Pty Ltd (1994) 52 FCR 201 at 203 per Hill J, referring to the judgment of Sheppard J in Colgate Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225; 118 ALR 248. But as Hill J pointed out in John S Hayes (at 203):

"... care must be taken not to circumscribe the discretion by reference to closed categories. It is not a necessary condition of the power to award costs that a collateral purpose be shown. The categories warranting the exercise of the discretion are not closed: Colgate Palmolive at 233; Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (Fed C of A, 3 May 1991, unreported) per French J at 8; Ragata Developments Pty Ltd v Westpac Banking Corp (Fed C of A, 5 March 1993, unreported) per Davies J at 6. In each case it will be necessary to look at the particular facts and circumstances to see whether an exercise of discretion to order costs on an indemnity basis is warranted."

(The emphasis is mine.)

Cooper and Merkel JJ said (at p.732-734):

"The principles which govern the undoubted discretion of courts to depart from ordering costs on a party and party basis and ordering costs on an indemnity basis ... which were stated by Sheppard J in Colgate Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 118 ALR 248....(are):

(1) (The Act) confers an absolute and unfettered discretion on the court to make orders as to costs but the discretion must be exercised judicially.

(2) In order to exercise the discretion judicially the following principles have been accepted by the court as applicable:

(a) the court ought not to depart from the rule that costs be ordered on a party and party basis unless the circumstances of the case warrant the court in departing from the usual course;

(b) the circumstances which may warrant departure from the usual course arise as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the court in departing from the usual course;

(c) while the circumstances in cases in which indemnity costs have been ordered offer a guide, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for costs other than on a party and party basis.

.... The rules apply unless otherwise ordered. The very fact and terms of the relevant rules suggest to us that, unless the justice of the particular case requires or some special or unusual feature arises, the rules should not be departed from by the making of some other order for costs in exercise of the jurisdiction conferred under s 43. The generality of the criteria for departing from the usual rule ensures that the discretion to depart from the rule can be exercised whenever the court is of the view that, after applying the criteria to the facts of the particular case, it is just to do so. Such an approach is consistent with the requirement that the discretion to award costs is to be exercised judicially."

(The emphasis is mine.)

Whilst the dictum of Woodward J in the Fountain Selected Meat case supra at p 40l was not expressly applied, it was not disapproved of either, and the reasons and decision of Woodward J were applied in another context.

Applying those principles to the present case I am persuaded that I should order the defendants against whom an ex parte interim quia timet injunction had already been granted, to pay the plaintiffs costs upon an indemnity basis. I am satisfied that the defendants 'acted unreasonably' and 'pursued a wholly unmeritorious and hopeless' course of action in seeking to have the interim quia timet injunction lifted 'in circumstances where the defendants, properly advised, should have known that they had no chance of success'. It is unnecessary for me to go further than to presume (as Woodward J. would do) that the application to have the injunction lifted was 'for some ulterior motive or because of some wilful disregard of the known facts or the clearly established law'. There is 'some special or unusual feature in (this) case' warranting this court exercising its discretion in this way. Indeed, 'the justice of this case so requires'.

In reaching these conclusions I found the plaintiffs counsel's written submissions on costs to be convincing and, in particular, paragraphs 10 to 11, 14 and 17 to 24.

With all due respect to the defendants' counsel, his written submissions were based upon a misconception; the question of costs for my decision arose from the defendants' unsuccessful application for an order discharging an injunction and not from proceedings brought against the defendants for contempt of court allegedly involved in a 'breach of the terms of (the) injunction.' Notwithstanding that misconception, I found myself unpersuaded by those submission'

I note from my reasons for judgment published following the hearing on 19 February 1999 that it was not in dispute that the document in question (i.e. the allowances list) was 'leaked' to the first defendant, that it was in the form of Exhibit A to the affidavit of Leaupepe Sanerivi Muliaumasealii sworn on 15th February 1999, that it contains details purporting to be allowances and benefits paid to the employees of the plaintiff and, in particular, to the high-ranking officers of the plaintiff, and that it contains excerpts from confidential records, and that the information contained in the document derives from the individual contracts and personal files of employees of the plaintiff, which information is private and confidential, according to the terms of the relevant Administration Manual.

I went on to state that 'the plain fact is that the document in question, when it was obtained by the defendants, had all the hall-marks of a confidential document. It 'exudes' confidentiality'. I used those words when I was dealing with that essential ground upon which the duty of confidence is based, namely 'the necessary quality of confidence'.

When dealing with that other essential ground upon which the duty of confidence is based, namely 'that the information was disclosed in circumstances imparting an obligation of confidence,' I said:

"One can hardly imagine anything more 'surreptitious' than when a company's private financial document is 'leaked' to the media".

I went on to use stronger words than usual when I stated:

"I find myself quite unable to accept that either a thief who steals a trade secret, knowing it to be a trade secret, with the intention of using it in competition with its owner, or a party who comes into possession of a 'leaked' confidential document, knowing it to be confidential, with the intention of using it to the detriment of the owner, is less unconscionable than a traitorous servant or staff member".

When dealing with the final ground upon which the duty of confidence is based, namely that there was 'unauthorised use of information to the detriment of the party communicating it,' I said that there was 'ample evidence, which I accept(ed),..... to support the plaintiffs contention' and I went on to state that 'the plaintiff has shown that the defendants were in the business of misuse of the information contained in the 'leaked' document and that such misuse was likely to operate to the detriment of the plaintiff.

The fact that the defendants were acting in a manner tantamount to an abuse of the process of the court was illustrated when I had reason to state that the defendants had 'not proven that the document reveals that misdeeds (had) occurred, let alone misdeeds of a serious or grave nature' so as to establish that disclosure in the public interest was warranted. I concluded by finding that, 'notwithstanding the insistence by the third defendant that some skulduggery was involved...., not one skerrick of evidence to substantiate his allegation (had) been adduced'.

'Specious' is a word to describe the argument presented on behalf of the defendants to the effect that what the plaintiff was seeking to do was unconstitutional. Quite to the contrary, the defendants' conduct had all the hallmarks of that of parties who were hell-bent on proceeding with an application (to have the injunction lifted) which they well knew was doomed to failure so that, if nothing else, they could complain thereafter that their constitutional right to freedom of speech and expression had been impaired.

Having re-examined the whole of the proceedings as they were before me in the light of the principles which govern the exercise of the discretion as to costs, I am firmly of the opinion that there is warrant for the conclusions set out above; those matters individually justify, (but they also, in their totality, justify) the exercise of the discretion in the plaintiff's favour.

With regard to the question of quantum of the costs, I propose to allow the plaintiff 90% of their actual 'solicitor and client costs', viz. $9,000.00. I order that the defendants do pay to the plaintiff such costs assessed upon an indemnity basis.

JUSTICE WILSON